ED finds Bengaluru firm running potential Ponzi scheme

Bengaluru, Nov 8 : The Enforcement Directorate (ED) on Thursday charged a city-based marketing firm with running a potential ponzi scheme offering huge interest to investors in the name of 'Islamic banking'.

"Investigation revealed that the city-based Ambidant Marketing Ltd has been operating a potential ponzi scheme and duping hundreds of investors in the name of Islamic banking and 'halal' investment," said ED in a statement.

Since inception on December 20, 2016, the company received cumulatively Rs 954 crore as investments under Haj/Umrah and Ultimate plans.

"We have written to the Reserve Bank of India to re-look into the scheme to protect the interests of investors/depositors being duped by the company," said an ED official in the statement.

In a ponzi scheme, an investment firm fraudulently collects huge money from depositors promising high interest rate, but uses it to pay heavy interest on deposits raised earlier from another set of investors.

"In a ponzi scheme, investors are made to believe that they earn high interest on their deposits from profits the company makes through lucrative business than from their own deposits, which are recycled," said the official.

The law enforcement agency also detected Ambidant collecting investments from hundreds of customers in the name of 'Halal' and offering 12 per cent returns (interest rate) per month or an astronomical 144 per cent per annum.

"Though the funds were collected through electronic mode, cheque or cash, they were neither registered with the RBI nor with the stock market regulator SEBI under their collective investment scheme," said the statement.

The ED found the offer of 10-12 per cent returns per month intriguing in the name of Islamic banking, which is based on the Shariat or Halal law.

Searches conducted on January 4-5, 2018 at Ambidant's premises in the city found that it had violated FEMA (Foreign Exchange Management Act) in forex trading to the tune of (Dollar) 6,62,146 (Rs 4.21 crore with (Dollar) at Rs 63.50 rate).

The searches were on the basis of an Income-Tax (I-T) Department letter dated November 11, 2017 to the economic intelligence wing of the Revenue Department.

Cash totalling Rs 1.97 crore was seized during the search from the residence of Ambidant owners Syed Fareed Ahmed and his son Syed Afaq Ahmed and confiscated under Section 13(2) of the FEMA.

Preliminary investigation also revealed a resident Indian opened several accounts abroad without the RBI permission and incorporating a firm in Dubai without prior approval of the RBI and the central government.

"A complaint was filed on February 2, 2018 against the company for the alleged FEMA violations and a penalty of Rs 1.86 crore was recovered after the Joint Director adjudicated the case," added the statement.

The Directorate has asked the Karnataka government to provide it a copy of all FIRs (first information report), including investigation by the state police, relating to the investment scheme for initiating a probe under the Prevention of Money Laundering Act./Eom/495 words.